Section 2

energy security ON nordic system level

Section 1 set out the trilemma lens and the heterogeneity of the region. This section unpacks the different energy security challenges across the Nordics through data. The sub-sections describe the Nordic energy system at aggregate level (2.1), the import dependence picture and how it is changing alongside the security implications of clean-energy supply chains (2.1.1), the consumption patterns that determine where supply disruptions are felt (2.2), and the implications that carry forward into the carrier-specific chapters that follow (2.3). The picture that emerges is one in which the security pillar of the trilemma is no longer adequately captured by oil import dependency alone, and the affordability pillar is shaped by mechanisms that operate well outside the Nordic perimeter.

Image: Vattenfall

Aggregate Nordic energy demand is roughly ten per cent of the EU total, comparable in size to Spain or Italy. However, the four mainland Nordic countries and Iceland are not an internally uniform bloc (see Figure 2.1. Detailed country profiles are in Annex 1). Norway is a structural net exporter with zero import dependency, driven by its hydrocarbon production and an almost entirely hydro-based electricity system. Sweden and Finland are the largest energy consumers in the region, both with electricity generation mixes anchored in hydro, wind and nuclear, and both have substantially reduced their import dependence over the past two decades through domestic wind and biofuel growth. Denmark has moved in the opposite direction, from full self-sufficiency in 2004 to 40 per cent import dependence today as North Sea fields have depleted, even as wind now dominates its electricity mix. Iceland is an outlier in a different sense: a geothermal and hydro-powered system with no physical connection to the continental grid, low import dependence, but energy consumption that has grown 61 per cent since 2004 on the back of industrial electrification and population growth.

* Norway energy production > 9000 PJ

Source: Eurostat.

Notes: Production refers to primary energy production (e.g. oil and gas extraction, solid biofuel production). Total energy supply (TES) is the primary energy fuelling the economy, including transformation losses (e.g. electricity generation, oil refining). Total final consumption (TFC) is the energy used by end consumers (industries, transport, households). The difference between TES and TFC reflects transformation losses, distribution losses, the energy sector's own consumption and changes in stocks. Transformation losses arise whenever primary energy is converted into a different carrier, for example when fuels are burned to generat electricity, or when crude oil is refined into usable products. These losses are not a sign of inefficiency but a physical characteristic of energy conversion.

Figure 2.1: Energy balances of the Nordic countries, 2024 (in petajoules (PJ)

The gap between production and final consumption is even starker for the Island Energy Systems (Figure 2.2). The Faroe Islands, Greenland and Åland depend on imports for the bulk of their primary energy, mostly oil products, with self-sufficiency ratios of 11, 17 and 31 per cent respectively. In terms of absolute volumes, their imports are small, but they are concentrated through a small number of ports. Energy security in these regions is therefore as much a logistics question as an energy question. Prolonged extreme weather, constrained ice-breaker availability and deliberate disruption can quickly translate into fuel shortages depending on local storage levels.

Sources: Faroese Environment Agency, Statistics Greenland, Ålands statistik- och utredningsbyrå.

Figure 2.2: Energy balances of the self-governed and autonomous and island regions, 2024

Overall, the relative weights of energy carriers in Nordic consumption differ notably from EU averages (Figure 2.3). Three differences matter for energy security. Electricity already accounts for the largest share of Nordic final consumption at 33 per cent in 2024, and that share is set to grow as transport and industry electrify. Oil still accounts for 29 per cent, especially because transport but also many industry sectors (including petrochemical feedstocks) and aviation depend on it. Coal and natural gas together account for low single-digit shares, well below the EU average.

Figure 2.3: Shares of energy sources in the Nordic energy system compared with the EU, 2024

● The Nordics ● The EU

Source: Eurostat.

Notes: Panel a) total final consumption; b) electricity generation; c) heat generation.
Renewable heat includes ambient, geothermal and solar heat. Recovered heat includes ambient, waste, geothermal and solar heat.

The low Nordic shares of coal and natural gas have a direct energy security implication. A coal or gas supply shock would not have a large direct effect on Nordic energy security at regional level. The indirect effect through electricity prices, especially in the case of natural gas, is a different matter. Natural gas is often the marginal fuel setting the wholesale electricity price in the integrated European market. The 2022 European energy crisis showed how that channel transmitted continental gas price spikes into Nordic household bills despite low gas use in the Nordic generation mix itself.

2.1 Dependence on imports as an energy security vulnerability

Overall, energy import dependence has shifted substantially over the last two decades (Figure 2.4). Denmark went from energy self-sufficiency in 2004 to roughly 40 per cent net import dependence in 2024, mainly because of declining oil and gas production from its depleting North Sea fields. Finland and Sweden moved in the opposite direction as domestic wind generation and biofuel production reduced their import needs. Norway has remained a structural net exporter throughout and is Europe’s largest producing country of both oil and natural gas (excluding Russia). With the United States, Norway is also EU’s largest supplier of oil and its largest source of natural gas.

The overall dependence ratio masks important nuances. In fuels, the headline figures do not capture import dependence in specific refined products such as jet fuels (explored further in Section 7). While import dependence on combustion-based fuels is gradually decreasing, the clean energy transition and electrification are generating new dependencies in the form of batteries, electric vehicles, components and critical minerals that the Nordic energy data does not yet capture.

Source: Eurostat.

Notes: The shares represent the portions of a country's total energy supply that are covered by domestic energy production (yellow) and imports (purple). E.g. in 2024, Denmark produced 60% and imported 40% of its energy needs. The origin of nuclear fuels and feedstocks for liquid biofuel production are beyond the scope of national energy data.

Figure 2.4: Change in energy import dependence in the Nordics, 2004–2024

2.1.1 Clean energy transition and supply chain security

The new clean energy technology and underlying critical minerals dependencies are real, but their security of supply dimension differs fundamentally from fossil fuel imports. Oil and gas require a continuous flow. If those imports are stopped and, once limited reserves are exhausted, the fossil fuel energy system stops. Clean energy technology imports are different in kind. Disrupting the supply of solar panels or wind turbine components would slow the expansion of renewable capacity, but it would not interrupt the output of existing installations in the short to medium term (unless repair components are not available to damaged infrastructure). In this sense, electrification strengthens Nordic energy security over time: the more of the energy system that runs on domestically generated electricity from hydro, wind, and geothermal sources that require no imported fuel, the smaller the share of the system that depends on an uninterrupted flow of imported commodities.

The energy transition has created a deeper category of import dependency that is less visible than fossil fuel dependency but geographically more concentrated. The IEA’s Energy Technology Perspectives 2026 estimates that China accounts for 60 to 85 per cent of production capacity for key clean-energy supply chains, and over 95 per cent for some individual production steps; less than 10 per cent of global rare-earth refining capacity sits outside China. China’s recent export controls on gallium, germanium, antimony, and rare-earth processing technologies underscore the risk of supply chain concentration.

In many cases, the most consequential bottlenecks are mid-chain, not at the mine: when a major Nordic mapped its wind turbine permanent magnet supply chain, it found that apparent supplier diversification masked a structural dependency, with the vast majority of high-performance magnets across multiple suppliers processed in China regardless of where final assembly took place. On the flip side, the Nordics with vast minerals resources are well positioned to be part of the solution through domestic critical minerals production and processing.

2.2 How consumption patterns shape energy security

How energy is used matters as much as where it comes from. Combining sectoral weights with sectoral fuel shares (Figure 2.5) gives a quick read on where supply disruptions are felt. Industry and the buildings sector each account for close to 40 per cent of Nordic final consumption. The long Nordic heating season is the main driver of buildings demand, which makes building-stock energy efficiency one of the most powerful levers on aggregate demand in the medium and long-run. Transport remains over 80 per cent oil-fuelled despite high electric vehicle uptake. The expectation across all sectoral scenarios is that the share of electricity will rise.

Figure 2.5: Energy consumption by economic sector in the Nordics, 2024

Source: Eurostat.
Notes: Industry includes non-energy use. Buildings includes residential and services. Others includes agriculture, forestry, fishing and unspecified energy consumption. Renewables here include biofuels, geothermal and solar thermal.

Sectoral fuel mix shapes which type of shock translates into which kind of disruption. Transport, still over 80 per cent oil-fuelled, depends on the continuous arrival of imported fuels and is therefore directly exposed to the geopolitically induced supply and price shocks set out in Section 1.5. Residential energy use, by contrast, is largely electrified and largely backed by Nordic generation, which means residential consumers are well hedged against fuel-supply shocks even though they remain exposed to the price-transmission channel running through the wider European wholesale electricity market. The flip side is that the buildings and industry sectors, as they electrify further, become more exposed to a different category of risk: cyber events affecting system operations and the consequences of disruption or sabotage of critical cross-border power lines. Sectoral electrification is a security upgrade against fuel shocks and a security trade-off against electricity-system shocks at the same time.

2.3 System-level characteristics: key implications

Four conclusions follow from the overview, and they shape how the trilemma plays out in the rest of the report. First, coal consumption is in terminal structural decline and a coal supply shock would have only marginal direct impact; the report does not analyse coal further. Second, natural gas consumption is on the same trajectory within the Nordic countries themselves, but because gas is often the marginal fuel in the European electricity market, gas supply disruptions transmit into Nordic electricity prices regardless of how little gas the Nordic system burns. Gas also retains a direct role in fertiliser production, petrochemical feedstocks and some high-temperature industrial heating, where substitution is technically difficult. Nordic gas production capacity, dominated by Norway, is therefore covered in Section 6. Third, oil consumption is gradually declining but will remain materially important at least through the 2030s, particularly in transport, aviation and the Island Energy Systems. Fourth, the centre of gravity of energy security is shifting towards electricity, and the institutional architecture has to keep pace with both the present fuel reality and the direction of change.

In trilemma terms, the security and affordability pillars are increasingly transmitted through electricity and electricity prices, while sustainability shapes both the threat and the resilience picture by reshaping the system itself. The risk typology in Section 1.5 is the lens through which the carrier-specific sections that follow should be read: local, regional and global risks compound differently across electricity, oil and gas, and the cooperation needs differ accordingly.